January __, 2004 (subject to extension for up to 90 days at the discretion of the Managing Trustee in the event that a sufficient number of consents required for the adoption – or rejection – of the proposals has not been received by such date). The Managing Trustee will provide notice to Beneficiaries of any extensions by means of a press release or a letter mailed to each Beneficiary. You may return the consent form to the Managing Trustee by fax, mail or hand-delivery c/o The Altman Group, Inc., 60 East 42ndStreet, Suite 405, New York, New York 10165, telephone: (800) 461-2657, facsimile: (212) 973-9818. A stamped envelope addressed to the Managing Trustee is enclosed for you to mail your consent form. To be valid, a consent form must be signed by the record owner(s) of the Interests represented thereby as listed in the records of the Trust on the Record Date and, if returned by fax, both sides of the consent form must be returned.
TABLE OF CONTENTS | PAGE |
PROPOSAL 1 - APPROVAL OF THE LIQUIDATION AND DISSOLUTION OF THE TRUST UNDER THE TERMS | |
AND CONDITIONS OF THE PLAN OF LIQUIDATION AND DISSOLUTION | 1 |
Background | 1 |
Reason for the Dissolution | 1 |
Terms of the Plan of Complete Liquidation and Dissolution | 2 |
Assets Subject to Liquidation | 2 |
Risks Involved with the Liquidation and Dissolution of the Trust | 3 |
Tax Consequences | 5 |
PROPOSAL 2 - APPROVAL OF THE AMENDMENT TO SECTION 7.3 OF THE TRUST AGREEMENT TO | |
ALLOW FOR THE SALEOF ASSETS BY THE TRUST TO ITS AFFILIATES | 6 |
The Amendment | 6 |
Reason for the Amendment | 6 |
Risks of the Managing Trustee's History of Engaging in Transactions with Affiliates | 7 |
PROPOSAL 3 - APPROVAL OF THE SALE OF THE TRUST'S MEMBERSHIP INTERESTS IN | |
MILPI HOLDINGS, LLC | 10 |
Reason for Sale | 10 |
Terms of the Sale | 10 |
Fairness Opinion | 11 |
Selected Financial Data | 17 |
Tax Consequences | 18 |
PROPOSAL 4 - APPROVAL OF THE AMENDMENTS TO SECTION 8.1(B) AND SECTION | |
7.7 OF THE TRUST AGREEMENT TO PERMIT THE MANAGING TRUSTEE TO MAKE DISTRIBUTIONS | |
IN-KIND TO AFFILIATES OF THE MANAGING TRUSTEE | 19 |
The Amendment | 19 |
Reasons for the Amendment | 19 |
UNAUDITED PRO FORMA FINANCIAL INFORMATION | 20 |
Notes to Unaudited Pro Forma Financial Information | 24 |
SUMMARY OF MATERIAL FEDERAL INCOME TAX CONSEQUENCES IN CONNECTION | |
WITH THE PROPOSALS | 27 |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 28 |
ADDITIONAL INFORMATION CONCERNING THE TRUST | 29 |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS | 30 |
Annex A Plan of Complete Liquidation and Dissolution | A-1 |
Annex B Fairness Opinion | B-1 |
Annex C Text of Amendment | C-1 |
Annex D Membership Interest Purchase Agreement | D-1 |
TRUST AGREEMENT
TO ALLOW FOR THE SALE OF ASSETS BY THE TRUST TO ITS AFFILIATES
Summary of Operations | September 30,2003 | Pro Forma September 30,2003 (1) | 2002 | Pro Forma December 31,2002 (1) | 2001 | 2000 | 1999 | 1998 |
Lease revenue | $ 3,613 | $ 3,613 | $ 5,682 | $ 5,682 | $ 6,520 | $ 7,734 | $ 10,287 | $ 15,201 |
Total revenue | $ 3,698 | $ 3,698 | $ 5,521 | $ 5,521 | $ 6,986 | $ 10,785 | $ 15,453 | $ 19.154 |
Net income (loss) | $ 1,027 | $ 668 | $ (1,451) | $ (1,846) | $ (5,599) | $ 2,050 | $ 5,803 | $ 4,999 |
Per Beneficiary Interest: | ||||||||
Net income (loss) | ||||||||
Class A Interests | $ 0.60 | $ 0.57 | $ (0.83) | $ (1.05) | $ (2.84) | $ 0.66 | $ 1.13 | $ 1.17 |
Class B Interests | $ (0.02) | $ (0.09) | $ - | $ - | $ (0.10) | $ 0.18 | $ 0.75 | $ 0.39 |
Cash distributions declared | ||||||||
Class A Interests | $ - | $ - | $ - | $ - | $ - | $ - | $ 4.56 | $ 1.64 |
Class B Interests | $ - | $ - | $ - | $ - | $ - | $ - | $ 3.66 | $ 2.10 |
Financial Position | ||||||||
_____________ | ||||||||
Total assets | $ 37,521 | $ 34,517 | $ 36,524 | $ 42,172 | $ 51,641 | $ 71,091 | $ 72,909 | |
Total long-term obligations | $ - | $ - | $ - | $ 22,383 | $ 26,221 | $ 32,573 | $ 35,073 | |
Participants' capital | $ 18,940 | $ 15,936 | $ 16,139 | $ 17,590 | $ 23,189 | $ 21,159 | $ 36,360 | |
AND SECTION 7.7 OF THE TRUST AGREEMENT
TO PERMIT THE MANAGING
TRUSTEE TO MAKE DISTRIBUTIONS IN-KIND TO AFFILIATES
OF THE MANAGING TRUSTEE
September 30, 2003
(unaudited)
Historical at September 30,2003 | Pro Forma Adjustments | Pro Forma at September 30,2003 | ||||
Assets | ||||||
Cash and cash equivalents | $ | 935 | $ | 8,300 A | $ | 9,235 |
Rents receivable | 295 | 295 | ||||
Accounts receivable - affiliate | 93 | 93 | ||||
Loan receivable – EFG/Kettle Development, LLC |
| 79 | 79 | |||
Interest receivable | 123 | 123 | ||||
Interest in EFG/Kettle Valley Development, LLC | 4,137 | 4,137 | ||||
Interest in EFG Kirkwood, LLC | 2,408 | 2,408 | ||||
Interest in MILPI Holdings, LLC | 11,304 | (11,304) A | - | |||
Interest in C & D IT, LLC | 1,157 | 1,157 | ||||
Investments - other | 258 | 258 | ||||
Other assets, net of accumulated amortization of $0.1 million | 399 | 399 | ||||
Equipment at cost, net of accumulated depreciation of$25.5 million | 16,333 | 16,333 | ||||
Total assets | $ | 37,521 | $ | (3,004) | $ | 34,517 |
Liabilities and participants' capital | ||||||
Notes payable | 16,346 | 16,346 | ||||
Accrued liabilities | 369 | 369 | ||||
Deferred rental income | 269 | 269 | ||||
Other liabilities | 1,597 | 1,597 | ||||
Total liabilities | 18,581 | 18,581 | ||||
Participants' capital (deficit): | ||||||
Managing Trustee | 10 | (37) A | (27) | |||
Special Beneficiary | 87 | (87) A | - | |||
Class A Beneficiary interests (1,786,753 interests; | ||||||
initial purchase price of $25 each) | 20,547 | (2,679) A | 17,868 | |||
Class B Beneficiary interests (3,024,740 interests; | ||||||
initial purchase price of $5 each) | 201 | (201) A | - | |||
Treasury interests (224,261 Class A interests at cost) | (2,339) | (2,339) | ||||
Accumulated other comprehensive income | 434 | 434 | ||||
Total participants' capital | 18,940 | (3,004) | 15,936 | |||
Total liabilities and participants' capital | $ | 37,521 | $ | (3,004) | $ | 34,517 |
Historical For the Nine Months Ended September 30, 2003 | Pro Forma Adjustments | Pro Forma For the Nine Months Ended September 30, 2003 | ||||
Revenue | ||||||
Lease revenue | $ | 3,613 | $ | - | $ | 3,613 |
Interest income | 84 | 84 | ||||
Gain on sale of equipment | 1 | 1 | ||||
Total revenues | 3,698 | 3,698 | ||||
Expenses |
| |||||
Depreciation and amortization | 1,455 | 1,455 | ||||
Interest expense | 1,179 | 1,179 | ||||
Management fees - affiliates | 295 | (73) C | 222 | |||
Operating expenses | 373 | 373 | ||||
Operating expenses - affiliate | 89 | 89 | ||||
Total expenses | 3,391 | (73) | 3,318 | |||
Equity Interests | ||||||
Equity in net income of EFG/Kettle Development, LLC | 27 | 27 | ||||
Equity in net income of EFG Kirkwood, LLC | 261 | 261 | ||||
Equity in net income of MILPI Holdings, LLC | 432 | (432) B | - | |||
Total income from equity interests | 720 | (432) | 288 | |||
Net income (loss) | $ | 1,027 | $ | (359) | $ | 668 |
Net income (loss) | ||||||
per Class A Beneficiary Interest | $ | 0.60 | $ | 0.57 | ||
per Class B Beneficiary Interest | $ | (0.02) | $ | (0.09) | ||
Pro Forma Statement of Operations For the Year Ended December 31, 2002 (in thousands of dollars) (unaudited) | ||||
Historical | Pro Forma | |||
For the | For the | |||
Year Ended | Pro Forma | Year Ended | ||
December 31, 2002 | Adjustments | December 31, 2002 | ||
Revenue | ||||
Lease revenue | $ 5,682 | $ - | $ 5,682 | |
Interest income | 64 | 64 | ||
Gain on sale of equipment | 1,249 | 1,249 | ||
Loss on sale of equipment | (1,474) | (1,474) | ||
Total revenue | 5,521 | 5,521 | ||
Expenses | ||||
Depreciation and amortization | 2,775 | 2,775 | ||
Impairment of assets | 599 | 599 | ||
Interest expense | 1,814 | 1,814 | ||
Interest expense - affiliates | 28 | 28 | ||
Management fees - affiliates | 434 | (98) | C | 336 |
Operating expenses | 889 | 889 | ||
Operating expenses - affiliate | 201 | 201 | ||
Total expenses | 6,740 | (98) | 6,642 | |
Equity Interests | ||||
Equity in net loss of EFG/Kettle Valley Development, LLC | (241) | (241) | ||
Equity in net loss of EFG Kirkwood, LLC | (484) | (484) | ||
Equity in net income of MILPI Holdings, LLC | 493 | (493) | B | - |
Total loss from equity interests | (232) | (493) | (725) | |
Net loss | $ (1,451) | $ (395) | $ (1,846) | |
Net loss | ||||
per Class A Beneficiary Interest | $ (0.83) | $ (1.05) | ||
per Class B Beneficiary Interest | - | - | ||
See accompanying notes. |
Original purchase price of the membership interest | $9,802 | |
Plus: Purchase Fees | 98 | (i) |
Less: Dividend paid to the Trust | (1,748) | (ii) |
Plus: Premium | 148 | |
| ||
Sale Price of membership interest | $8,300 | |
Name and Address of Beneficial Owner(1) | Number of Class A Interests | Percent of Class A Interests Owned | Number of Class B Interests | Percent of Class B Interests Owned | Percentage of Special BeneficiaryInterest Owned |
Equis II Corporation(2). | 5,240 | * | 3,019,222 | 99.8% | – |
Semele Group, Inc. (3). | 14,450 | * | 3,019,222 | 99.8% | 100% |
Gary D. Engle(4). | 14,450 | * | 3,019,222 | 99.8% | – |
James A. Coyne(5). | 14,450 | * | 3,019,222 | 99.8% | – |
450 Fifth Street, N.W.
Washington, D.C. 20549
Company SEC Filings | Period |
Annual Report on Form 10-K | Year ended December 31, 2002 |
Quarterly Report on Form 10-QSB | Quarter ended March 31, 2003 |
Quarterly Report on Form 10-QSB | Quarter ended June 30, 2003 |
Quarterly Report on Form 10-QSB | Quarter ended September 30, 2003 |
Periodic Report on Form 8-K | December 4, 2003 |
Trustee and not individually
Name:
Title:
Trustee and not individually
Name:
Title:
Plan of Liquidation
OF
CERTIFICATE OF TRUST
OF
AFG INVESTMENT TRUST C
and not individually
Trustee and not individually
Fairness Opinion
EQUIPMENT LEASING BUSINESS |
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| ACTUAL |
| PROJECTED | |||||
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| FYE | 1/1 - 9/30(1) |
| 10/1 - 12/31 | FYE | |||
|
| 2002 | 2003 |
| 2003 | 2004 | 2005 | 2006 | 2007 |
Revenues: |
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|
|
Management Fees |
| $ 4,494 | $ 2,166 |
| $ 951 | $ 4,011 | $ 3,650 | $ 3,284 | $ 1,171 |
Partnership Interests and Other Fees |
| 24 | 541 |
| 219 | 1,448 | 1,097 | 7,692 | 7,518 |
Operating Leases |
| 122 | 108 |
| 50 | - | - | - | - |
Acquisition Fees |
| - | 517 |
| 550 | 1,100 | - | - | - |
Gain on Sale |
| - | 157 |
| - | - | - | - | - |
Other |
| 588 | 250 |
| - | 70 | - | - | - |
Total Revenues |
| 5,228 | 3,739 |
| 1,770 | 6,629 | 4,747 | 10,976 | 8,689 |
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Costs and Expenses: |
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Impairment of Managed Programs |
| 368 | 277 |
| - | - | - | - | - |
Depreciation and Amortization |
| 177 | 258 |
| - | - | - | - | - |
Trust C & D Related Expenses |
| - | - |
| - | - | - | - | - |
General and Administrative |
| 2,800 | 1,721 |
| 683 | 2,829 | 2,928 | 3,031 | 1,770 |
Total Costs and Expenses |
| 3,345 | 2,256 |
| 683 | 2,829 | 2,928 | 3,031 | 1,770 |
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EBIT |
| 1,883 | 1,483 |
| 1,087 | 3,800 | 1,818 | 7,945 | 6,919 |
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Less: Taxes |
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| (108) | (5,900) | (1,836) | (4,175) | (8,254) |
Plus: Depreciation |
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| - | - | - | - | - |
Change in Net Working Capital |
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| (2) | (42) | 57 | 101 | 281 |
Free Cash Flow |
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|
| 977 | (2,142) | 40 | 3,872 | (1,054) |
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Present Value of Projected Cash Flows @ 20.0% Discount Rate |
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| $ 934 | $ (1,735) | $ 43 | $ 2,029 | $ (735) | ||
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Present Value of Projected Cash Flows @ 25.0% Discount Rate |
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| $ 924 | $ (1,654) | $ 42 | $ 1,753 | $ (668) | ||
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| Discount Rate |
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|
| 20.0% | 25.0% |
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Net Present Value of Equipment Leasing Projected Cash Flows | $ 536 | $ 398 |
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RANCHOMALIBU PARTNERSHIP |
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| ACTUAL |
| PROJECTED | |||||
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| FYE | 1/1 - 9/30(1) |
| 10/1 - 12/31 | FYE | |||
|
| 2002 | 2003 |
| 2003 | 2004 | 2005 | 2006 | 2007 |
Partnership Revenues: |
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|
Rancho Malibu Return of Capital & Interest |
| $ - | $ - |
| $ - | $ - | $ - | $ 8,276 | $ 1,434 |
Rancho Malibu Partnership Income |
| - | - |
| - | - | - | - | 5,210 |
Total Partnership Revenues |
| - | - |
| - | - | - | 8,276 | 6,644 |
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Plus: Tax Benefit |
| - | - |
| - | - | 1,901 | 3,924 | 307 |
Free Cash Flow |
| - | - |
| - | - | 1,901 | 12,200 | 6,950 |
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Present Value of Projected Cash Flows @ 20.8% Discount Rate |
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| $ - | $ - | $ 1,335 | $ 6,803 | $ 3,518 | ||
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Net Present Value of RanchoMalibu Partnership Projected Cash Flows | $ 11,657 |
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(1) The nine months ended September 30, 2003, includes six months of actual results (1/1 - 6/30) and three months of estimated results (7/1 - 9/30). |
Implied Equity Value Discounting Equipment Leasing @ 25% | ||
Net Present Value of Equipment Leasing Projected Cash Flows..... | $ | 398 |
Net Present Value of Rancho Malibu Partnership Projected Cash Flows. | 11,657 | |
Net Present Value of MILPI’s Consolidated Cash Flows....... | 12,055 | |
Current Assets.......................... | 18,320 | |
Cash Surrender Value of Officer’s Life Insurance Policies....... | 3,034 | |
Estimated Total Enterprise Value................ | 33,409 | |
Less: Debt & Other Obligations................... | (13,639) | |
Less: Stock Split Payable.................... | (504) | |
Less: PDS Liability....................... | (352) | |
Less: Tender Offer Payable.................... | (1,674) | |
Less: Note Payable to Semele................... | (2,596) | |
Estimated Fair Market Value of Equity........... | $ | 14,644 |
Implied Equity Value Discounting Equipment Leasing @ 20% | |
Net Present Value of Equipment Leasing Projected Cash Flows..... | 536 |
Net Present Value of Rancho Malibu Partnership Projected Cash Flows. | 11,657 |
Net Present Value of MILPI’s Consolidated Cash Flows....... | 12,192 |
Current Assets.......................... | 18,320 |
Cash Surrender Value of Officer’s Life Insurance Policies....... | 3,034 |
Estimated Total Enterprise Value................ | 33,546 |
Less: Debt & Other Obligations................... | (13,639) |
Less: Stock Split Payable.................... | (504) |
Less: PDS Liability....................... | (352) |
Less: Tender Offer Payable.................... | (1,674) |
Less: Note Payable to Semele................... | (2,596) |
Estimated Fair Market Value of Equity........... | $ 14,781 |
CLASS A AND B BENEFICIARIES By: AFG ASIT Corporation, as Attorney-in-Fact for each of the Beneficiaries pursuant to Article XIII of the Trust Agreement By: _________________________________________ Name: Title: | |
AFG ASIT Corporation, as Managing Trustee By: ___________________________________________ Name: Title: | |
Wilmington Trust Company, as Delaware Trustee By: ___________________________________________ Name: Title: | |
Semele Group Inc., as Special Beneficiary By: ___________________________________________ Name: Title: |
Definitions
Purchase and Sale of Membership Interests; Purchase Price
Representations and Warranties of the Sellers and Purchasers
Conditions to the Purchaser’s Obligations
General Provisions
Name: James A. Coyne
Title: Senior Vice President
Name: James A. Coyne
Title: Senior Vice President
Title:
MEMBERS
Name and Address of Member(1) | Total MembershipInterests Prior to Sale(2) | Total MembershipInterests after Sale(3) | Purchase Price |
AFG Investment Trust C | 50% | 0% | $8,300,000 |
AFG Investment Trust D | 50% | 0% | $8,300,000 |
PLM MILPI Holdings LLC | 0% | 100% | N/A |
Total | 100% | 100% | $16,600,000 |
Westport, Connecticut 06880
If the Beneficiary is an Individual: | |||
SignatureDate | SignatureDate | ||
Print Name | Print Name | ||
(If Joint Tenants Or Tenants-In-Common, Both Owners Must Sign): | |||
If the Beneficiary is a Corporation, Partnership or Trust: | |||
Name of Entity | |||
By: | |||
Signature | |||
Print Name | |||
Title | Date |